W. P. Carey (WPC) is better positioned for a sustained inflationary environment following years of portfolio simplification that have improved its internal and external growth profile, BofA Securities said in a Tuesday note.
The analyst said that about 49% of annual base rent is now tied to CPI escalators, with a meaningful portion uncapped, while fixed rent escalators typically range from 1.5% to 3% depending on asset type. This structure is supporting more resilient and predictable income growth.
BofA noted that contractual same-store rent growth is running in the mid-2% range, in line with company guidance, with about 75% of new investments tied to CPI-linked escalators. It also pointed to improving investment activity, with W. P. Carey on track to exceed its 2026 investment guidance of $1.5 billion.
The investment firm also lowered its 2026 credit loss assumption to between 50 and 75 basis points from 75 basis points, reflecting progress in addressing prior tenant issues and improving portfolio quality, while citing continued strength in acquisition-led growth and rent escalation visibility.
BofA upgraded its rating on the stock to neutral from underperform and raised its price target to $83 from $73.
W. P. Carey shares were up nearly 1% in Tuesday trading.
Price: $76.10, Change: $+0.63, Percent Change: +0.83%